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The State Administration of Foreign Exchange (SAFE) has recently published the Balance of Payments and the International Investment Position for the third quarter and the first three quarters of 2017, and its press spokesperson answered media questions regarding relevant issues. Q: Could you brief us on China's balance of payments for the first three quarters of 2017? A: China witnessed twin surplus under the current account and the financial account in the Balance of Payments (excluding reserve assets) and increased reserve assets for the first three quarters of 2017. A surplus was registered under the current account. In the first three quarters, a surplus of USD 109.8 billion was recorded under the current account, contributing 1.3% to China's GDP, which remained reasonable. To be specific, a surplus of USD 334.7 billion was registered in trade in goods in the Balance of Payments, with exports of USD 1.5953 trillion and imports of USD 1.2605 trillion, which increased by 10% and 17% year on year respectively, indicating stronger momentum for the recovery foreign trade. A surplus was registered under the financial account that excludes reserve assets. A surplus of USD 112.1 billion was registered under the financial account that excludes reserve assets in the first three quarters of 2017, compared with a deficit of USD 313.9 billion for the same period the previous year. On the one hand, outbound investments remained steady. China posted a net increase of USD 213 billion in external financial assets due to the balance of payments transactions in the first three quarters. Specifically, net ODI went up by USD 65.1 billion; net external securities investment rose by USD 64.1 billion; and other investments such as external deposits and loans increased by USD 85.8 billion net. On the other hand, overseas investors continued to increase investments in China. In the first three quarters, the net external liabilities grew by USD 325.1 billion. To be specific, FDI climbed by USD 87.9 billion net; securities investment in China rose by USD 82.1 billion net; and other investments such as non-resident deposits attracted and loans obtained jumped by USD 155.9 billion net. An increase was recorded in reserve assets. In the first three quarters, China's reserve assets rose by USD 58.9 billion due to the balance of payments transactions (excluding non-trading factors such as exchange rate and price), compared with a decrease of USD 294.1 billion the same period of the previous year. In particular, foreign exchange reserves went up by USD 59.8 billion and reserve position in the IMF went down by USD 900 million. As the sustained recovery of the global economy helps strengthen the external demand, China's economy is operated within a reasonable range and the financial market is further opened up, China's balance of payments is expected to continue the basic equilibrium going forward. Q: What would you say about China's International Investment Position as at the end of September 2017? A: As at the end of September, China witnessed increased external financial assets and liabilities against the end of the previous year. China posted USD 1.7064 trillion in net external assets as at the end of September, including USD 6.7928 trillion in external assets, USD 5.0864 trillion in external liabilities, which went up by 5.0% and 9.0% respectively against the end of the previous year (same below). External assets were on an upward trend. To be specific, ODI rose by USD 75.9 billion or 5.8%; securities investment grew by USD 88.7 billion or 24.3%; financial derivative instruments went up by USD 1.5 billion or 28.8%; other investments increased by USD 53.6 billion or 3.2%; and reserve assets climbed by USD 106.5 billion or 3.4%. External liabilities continued to recover. Specifically, FDI grew by USD 87.4 billion or 3.0%; securities investment rose by USD 162.1 billion or 20.0%; financial derivative instruments went down by USD 1.8 billion or 26.8%; and other investments rose by USD 172.7 billion or 17.5%. In terms of the composition of external assets, reserve assets was USD 3.2044 trillion, 47% of total assets; ODI was USD 1.3931 trillion, 21% of total assets; securities investment was USD 453.8 billion, 7% of total assets; financial derivative instruments was USD 6.7 billion, 0.1% of total assets; and other investments hit USD 1.7347 trillion, 26% of total assets. With regard to the composition of external liabilities, FDI was USD 2.9533 trillion, 58% of total liabilities, the highest among external liabilities; securities investment was USD 970.7 billion, 19% of total liabilities; financial derivative instruments was USD 4.8 billion, 0.1% of total liabilities; and other investments reached USD 1.1576 trillion, 23% of total liabilities. Overall, China sustained its No. 1 position worldwide by reserve assets. With orderly outbound investments and rising inbound investments, China's international investment position is robust. 2017-12-28/en/2017/1228/1388.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the external debt data as at the end of September 2017 and its official answered press questions regarding the recent external debt status in China. Q: Could you brief us on the external debt status in China for the first three quarters of 2017? A: China's external debt grew stably in the first three quarters of 2017. As at the end of September 2017, China's full-scale outstanding external debt (denominated in the RMB or other currencies) amounted to USD 1.68 trillion, an increase of USD 117.2 billion or 7.5% from the end of June. Increased debt securities, trade credit and prepayment were the major sources of growth. In particular, the growth of debt securities accounted for 45% of the overall growth of external debt, indicating that alongside the liberalization of the inter-bank bond market, foreign institutions have become more involved in the domestic bond market. The increase in trade credit and prepayment was about 20% of the overall increase in external debt, which is closely related to the ongoing recovery of China's foreign trade. Q: How to look at China's current external debt status? A: China's economy has shown a strong momentum for growth while maintaining stability, providing a solid foundation for the steady growth of external debt. China's economy sustained stable growth in the first three quarters, with GDP hitting RMB 59.3 trillion, up by 6.9% year on year. Its imports and exports rose fast, with total import and export value reaching RMB 20.3 trillion in the first three quarters, up by 16.6% year on year. The two-way fluctuations of the RMB exchange rates displayed much stronger flexibility, the expectations of foreign exchange rates stayed stable, and the demand for cross-border financing from the real economy was strengthened. Policy dividends have been yielded to provide important conditions for the stable growth of China's external debt. With the implementation of measures for trade investment and financing facilitation such as the macro-prudential management policy for full-scale cross-border financing and free trade zones, a growing number of enterprises have benefitted from policy dividends, expanding their financing channels while reducing their financing costs. The inter-bank bond market has been increasingly liberalized. In particular, the launch of Bond Connect between the mainland and Hong Kong in July has further diversified the channels for overseas investors to participate in China's financial market, increasingly motivating overseas institutions to hold more of domestic bonds. Going forward, China will improve the macro-prudential management of cross-border financing by enhancing the control framework with two pillars of monetary policy and macro-prudential policy, and keep a close watch on the changes in external debt and better integrate serving the real economy and guarding against systematic risks, in a bid to boost the sustainable and healthy development of China's economy. 2017-12-28/en/2017/1228/1389.html
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The branches and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government, the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, and all designated Chinese-funded foreign exchange banks: To implement the requirements of the State Council on reformative measures such as streamlining administration and power delegation, combination of regulation and deregulation, and optimizing services, and to further promote trade facilitation, the SAFE has streamlined relevant regulatory documents and would here like to notify you of the effectiveness of a selection of regulatory documents: I. The following two regulatory documents on foreign exchange administration are abolished: (I) Circular of the General Affairs Department of the State Administration of Foreign Exchange on Relevant Issues Concerning Standardization of the Information System Codes (Huizongfa No. 101 [2009]) (II) Circular of the State Administration of Foreign Exchange on Issuing the Standards Version 1.0 for Collecting Data on Foreign Exchange Transactions by Financial Institutions (Huifa No. 18 [2014]) II. The following four regulatory documents on foreign exchange administration are announced invalid: (I) Supplementary Circular of the State Administration of Foreign Exchange on Issues Concerning Domestic Residents' Investments in the B-Share Market with their Personal Foreign Exchange Deposits (Huifa No. 33 [2001]) (II) Reply of the General Affairs Department of the State Administration of Foreign Exchange to Promoting the Use of Online Reporting and Approval System with Regard to Foreign Exchange Receipts and Payments of Foreign-funded Enterprises (Huizongfu No. 83 [2005]) (III) Circular of the Balance of Payments Department of the State Administration of Foreign Exchange on Using the National Information Sharing Platform with Regard to Organization Code (Huiguofa No. 14 [2006]) (IV) Circular of the General Affairs Department of the State Administration of Foreign Exchange on Launching the Statistical System for External Financial Assets and Liabilities and Foreign Transactions (Huizongfa No. 1 [2015]) The Circular will take effect as of the date of promulgation. Upon receipt of this Circular, all branches and foreign exchange administration departments of the SAFE shall immediately forward it to the central sub-branches, sub-branches, urban and rural commercial banks and foreign banks within their respective jurisdictions; and all designated Chinese-funded foreign exchange banks shall forward it to their branches and sub-branches as soon as possible. State Administration of Foreign Exchange December 1, 2017 2017-12-07/en/2017/1207/1396.html
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On December 30, 2017, Zhou Xiaochuan, secretary of the CPC Committee and governor of the People's Bank of China (PBC), visited the Investment Center of the State Administration of Foreign Exchange (SAFE) to meet with officials for the operation and management of foreign exchange reserves, accompanied by Yi Gang, deputy secretary of the CPC Committee and deputy governor of the People's Bank of China, Pan Gongsheng, member of the CPC Committee and deputy governor of the PBC and administrator of the SAFE, and Yin Yong, member of the CPC Committee and deputy governor of the PBC, and Lu Lei, deputy administrator of the SAFE. On behalf of the CPC Committee of the PBC, Zhou Xiaochuan showed his care for every official involved in the operation and management of foreign exchange reserves and confirmed the accomplishments already achieved in this regard. According to Zhou Xiaochuan, the year 2017 was key to the implementation of the 13th Five-year Plan and also witnessed the deepening of the supply-side structural reform. In the face of complex reform tasks and economic and financial conditions both at home and abroad, the Investment Center was committed to the implementation of the gist of the 19th CPC National Congress, the National Financial Work Conference and the Central Economic Work Conference under the leadership of the Central Committee and the State Council. By focusing on serving the real economy, guarding against financial risks and deepening the financial reform, the Investment Center pushed forward the operation and management efforts and ensured the security, flows and preservation and maintenance of the value of assets, making great contribution to serving the national development strategy and safeguarding economic and financial security. Zhou emphasized that the year 2018 marks the first year to implement the gist of the 19th CPC National Congress and the 40th anniversary of the reform and opening up, and is crucial to the building of a moderately prosperous society in all respects. Following the gist of the 19th CPC National Congress and Xi Jinping thought on socialism with Chinese characteristics for a new era, officials involved in the operation and management of foreign exchange reserves shall keep in mind their mission and purpose and forge ahead in a down-to-earth manner to promote the operation and management of foreign exchange reserves to a new high, better serve the real economy and the new pattern of reform and opening up and strive for the fulfillment of the Chinese dream of great national rejuvenation. 2017-12-30/en/2017/1230/1392.html
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Q: The latest data on foreign exchange reserves disseminated by the People's Bank of China (PBC) show that China's foreign exchange reserves as at the end of December 2017 went up by USD 20.7 billion month on month. Could you brief us on the causes of such a change? What will be the future trends? A: As at the end of December 2017, China's foreign exchange reserves hit USD 3.1399 trillion, up by USD 20.7 billion or 0.66% month on month, marking the 11th month of consecutive growth. In December, China's cross-border capital flows and trading by domestic and foreign market participants stayed stable and balanced. Globally, the financial markets fluctuated slightly. The foreign exchange rates of major non-USD currencies and asset prices rose, driving China's foreign exchange reserves to go up. Through out the year, China's foreign exchange reserves recovered stably after a drop to USD 2.9982 trillion in January, with the figure for the yearend climbing by USD 129.4 billion or 4.3% from that of the beginning of the year. China's macroeconomic performance remained stable in the year with a strong momentum for growth, boosting cross-border capital flows to be more stable and balanced. The equilibrium of the balance of payments provided a guarantee for the continuous and steady recovery of foreign exchange reserves. 2018 is the first year to implement the spirit of the 19th CPC National Congress, key to building a moderately prosperous society in all respects and implementing the 13th Five-year Plan. Under the leadership of the CPC Central Committee with Comrade Xi Jinping at its core, China will adhere to the general work guideline of making progress while maintaining stability, the new development philosophy and the requirement for high-quality development, to enhance the stability and resilience of economic performamce and ensure the development trend of mainitaing stability with a strong moement for grwth. As external demand rises, finanical marketa are further liberalized and market expectations are improved alongside the continuous global econonic recovery, China's balance of payments and foreign exchange reserves will remain stable and balanced going forward. 2018-01-07/en/2018/0107/1393.html
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Since the beginning of 2017, to implement the reform requirements of the CPC Central Committee and the State Council on pushing forward administration streamlining and power delegation, combination of deregulation and regulation, and optimization of services, the State Administration of Foreign Exchange (SAFE) has been committed to legislation in key areas and documents streamlining. Based on this, to facilitate public enquiry and application, the SAFE then updated the Catalogue of Major Existing Laws and Regulations in Effect on Foreign Exchange Administration ("Catalogue") and released it at its official website. The upgraded Catalogue contains 223 main laws and regulations on foreign exchange administration released as of December 31, 2017, which fall into eight categories including general foreign exchange administration, foreign exchange administration under the current account, foreign exchange administration under the capital account, regulation of the foreign exchange business of financial institutions, the RMB exchange rate and the foreign exchange market, balance-of-payments and foreign exchange statistics, foreign exchange inspections and application of the laws and regulations, and the scientific administration of foreign exchange, and several sub-categories by specific business type. The extra documents added to the Catalogue covers various topics, such as foreign exchange sales and settlement for foreign people, improvement of declaration of personal foreign exchange information, foreign exchange administration for financial leasing, foreign exchange administration for overseas loans under domestic guarantees, foreign exchange administration for overseas deals with bank cards, regulating large-sum overseas cash withdrawals with bank cards, rules on business reviews for the declaration of balance of payments statistics via banks, verification rules for external financial assets and liabilities and trading statistics, guidance on statistics collection regarding external financial assets and liabilities and trading, and unified social credit code applicable to the foreign exchange business system. Going forward, the SAFE will carefully implement the work arrangements by the CPC Central Committee and the State Council, deepen the foreign exchange administration reform, deepen legislation and document streamlining in key areas, and enhance trade and investment facilitation to serve the real economy. 2018-01-15/en/2018/0115/1395.html
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The State Administration of Foreign Exchange (SAFE) has recently published the Circular of the State Administration of Foreign Exchange on Regulating Large-sum Overseas Cash Withdrawals with Bank Cards (Huifa No. 29 [2017]) (Circular) to regulate large-sum cash withdrawals overseas with bank cards and enhance regulation against cross-border money laundering. The highlights of the Circular include: first, in overseas cash withdrawals by individuals with domestic bank cards, the sum of withdrawals using the bank cards under the name of the individual (including additional cards) shall not exceed the equivalent of RMB 100,000 in every civil year. Second, the daily quota per card for overseas cash withdrawals with RMB cards and foreign currency cards is the equivalent of RMB 10,000. Third, in case of overseas cash withdrawals in excess of the annual quota, the individuals will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years. Fourth, individuals are prohibited from borrowing others' bank cards or lending their bank cards to evade or help evade the management of overseas cash withdrawals. The SAFE supports individuals' use of bank cards overseas in compliance with regulations. Regulating large-sum overseas cash withdrawals with bank cards is crucial to cracking down on money laundering, terrorist financing and tax evasion, and can help guard against illegalities associated with cash withdrawals with bank cards. The Circular, aligned with the requirement of ensuring currency convertibility under the current account, does not contradict with the annual quota of USD 50,000 for foreign exchange purchases by individuals, or impact individuals' normal withdrawals of cash and consumption, or the convenience for individuals to use foreign exchange. This Circular will become effective on January 1, 2018. 2017-12-30/en/2017/1230/1390.html
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Q: Recent media reports say China is considering stopping buying or buying less US treasury bonds. Is this true? A: We have noted it from some media reports. We believe this may be a citation from wrong sources or even false news. China has always made investment with or managed foreign exchange reserves following the principle of diversification and fragmentation, in order to ensure the overall security, value preservation and growth of foreign exchange assets. Like other investments, investing in US treasury bonds with foreign exchange reserves is a market behavior that is subject to professional management based on market situations and investment needs. For both foreign exchange reserves and the market involved, China's foreign exchange reserves operation and management authorities are responsible investors, and their investing activities have boosted the stability of global financial markets and the value preservation and growth of China's foreign exchange reserves. 2018-01-11/en/2018/0111/1394.html
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The time-series data of China's Gross External Debt Position by Sector(since2014Q4) 2026-03-27/en/2018/0329/1412.html
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Opening-up is imperative to the flourishing of our country. In his report to the 19th CPC National Congress, Secretary-general Xi Jinping said: "We shall make new ground in pursuing opening-up on all fronts". In the third group study among the members of the Political Bureau of CPC Central Committee, Xi Jinping stressed: "A system of pursuing opening-up on all fronts that is diversified, balanced, secure and efficient should be built to develop an open economy of higher standards". The foreign exchange market is a window for China's reform and opening up and communication with the rest of the world, and a hub that connects domestic and foreign markets and resources. In recent years, under the leadership of the CPC Central Committee with Comrade Xi Jinping at its core, foreign exchange authorities have established "four consciousnesses". Following the underlying principle of pursuing progress while ensuring stability, foreign exchange authorities have been committed to pressing ahead with the foreign exchange administration reform, promoting the liberalization of the foreign exchange market, and preventing the risks associated with cross-border capital flows, thus safeguarding the national economic and financial security. In addition, the healthy and orderly foreign exchange market environment is conducive to making new ground in pursuing opening-up on all fronts. I. China's cross-border capital flows have reached a basic equilibrium Under the combined impact of both domestic and foreign factors, cross-border capital flows had shifted from long-term net inflows to net outflows for a while in the past few years, leaving China's foreign exchange market seriously affected by cross-border capital flows for a period of time. Under the leadership of the CPC Central Committee and the State Council, authorities such as the People's Bank of China and the State Administration of Foreign Exchange (SAFE) adopted multi-prolonged measures and policies, particularly the macro-prudential policy for the counter-cyclical regulation of cross-border capital flows, which has produced positive results and ensured stability of the foreign exchange market and national economic and financial security. Under the combined effect of the macroeconomic fundamentals, global economic and financial environments, policies and measures, the cross-border capital flows and the supply and demand of foreign exchange in China reached a basic equilibrium in 2017, with foreign exchange reserves recovering slightly, the RMB exchange rate against the USD rising stably and the RMB exchange rate against a basket of other currencies becoming basically stable. (I) The supply and demand in the foreign exchange market has become more balanced. In 2017, a deficit of USD 111.6 billion was registered in banks' foreign exchange sales and settlements, down by 67% year on year. With spot and forward foreign exchange sales and settlements as well as options taken into consideration, the supply and demand of foreign exchange have moved towards an equilibrium since February 2017 and now stay basically balanced. Cross-border capital flows have also become more balanced. In 2017, non-banking sectors such as enterprises and individuals registered USD 124.5 billion in net outflows of cross-border capital, down by 59% year on year. Specifically, China posted USD 25.2 billion, USD 59 billion, USD 27.3 billion and USD 13 billion respectively in net outflows of cross-border capital from the first to the fourth quarter, indicating net outflows were on the decline. (II) Market participants' behaviors in foreign-related transactions have become more stable. Amid the two-way fluctuations of the RMB exchange rate, enterprises' and individuals' behaviors in foreign-related transactions have been diversified rather than simplistic as they were previously, and more of them arrange cross-border receipts and payments, and foreign exchange sales and settlements based on real demand. In 2017, the surplus in foreign exchange sales and settlements under trade in goods and foreign exchange settlements under FDI were on an upward trend, cross-border financing continued stable growth, and outbound investment and individual purchases of foreign exchange declined systematically. (III) The balance of foreign exchange reserves has perked up for 11 consecutive months. As at the end of 2017, the balance of foreign exchange reserves hit USD 3.1399 trillion, up by USD 129.4 billion year on year, representing rises for 11 straight months since February 2017. (IV) The RMB exchange rate has risen stably against the USD and remained stable against a basket of other currencies. In 2017, the central parity rate of the RMB against the USD rose by 6.2%, and the CFETS RMB exchange rate index compiled by China Foreign Exchange Trade System climbed by 0.02%. II. Favorable factors will help reduce risks associated with cross-border capital flows in China going forward In 2018, following the underlying principle of pursuing progress while ensuring stability, the new vision for development and the requirements for high-quality development, China will witness rising stability and resilience in economic performance and may continue to see stable development with strong momentum for growth. As external demand is strengthened alongside the world economic recovery, the financial markets are further liberalized, and market expectations improve, China's balance of payments and cross-border capital flows will maintain a basic equilibrium. The high-quality development model will help strengthen market confidence in the long term. In 2018, the first year of implementing the spirit of the 19th CPC National Congress, China will focus on the supply-side structural reform while stabilizing growth, promoting reform, adjusting structure, benefitting the people and preventing risks, so as to boost the sustainable and healthy development of the economy and society, which will consolidate the confidence of domestic and foreign market participants in investing and operating in China in the long term. The sound economic fundamentals are still a driver of stable cross-border capital flows in China. China's economic growth is relatively high at the global level, and in particular, the economic structure is improved, the aggregate supply and demand is more balanced and the momentum for endogenous growth is strengthened. The domestic industrial chains and supporting facilities are being enhanced, and workers' skills are well matched with companies' requirements, which will help ensure smooth operations and high returns. At the same time, residents' incomes are on the rise, and their consumption is further upgraded, indicating high potential of the domestic markets, which will be a key consideration in attracting investments. Further, China's macro policies are well targeted, systems and regimes are flexible, financial markets are robust and foreign exchange reserves are adequate, indicating China will be capable of responding to and solving risks. Making new ground in pursuing opening-up on all fronts will help balance cross-border capital flows. In 2018, the 40th anniversary of the implementation of the reform and opening up policy, the scope and level of opening up will be further expanded, market entry will be loosened, laws on foreign capital will be improved, and intellectual property rights protection will be intensified, so as to attract more capital to flow into the country on a long-term basis. With the smooth implementation of financial market reforms and opening up, foreign investors will become more aggressive in investing in China's capital market. Focusing on the Belt and Road Initiative, China will attach equal importance to "bringing in" and "going global" to make it easier to achieve balanced capital flows. The external environment will be favorable as the global economic and financial performance remains stable. In 2018, the global economy will continue to recover, with its growth rate expected by the IMF to be 3.9%, up by 0.2 percentage point from a year earlier. The consumption and employment in the US will be generally optimistic and Trump's tax plan will be favorable to boost the country's economy and push up the expectations of inflation. Spurred by a greater momentum for stronger domestic demand and rising external demand, manufacturing PMI in the Eurozone set a new record in January 2018 and economies such as Germany, Italy and the Netherlands are expected to see higher growth rates, and therefore, the Eurozone may sustain a huge momentum beyond expectations in 2018. Japan's GDP has continued to rise for seven consecutive quarters and its manufacturing PMI reading has been above 50 for 16 straight months, and therefore, the country's central bank has recently expanded the prediction interval of economic growth in 2018. Benefitting from the perking up of the global economy, higher commodity prices and the positive results of domestic reforms, BRICS countries such as Russia, Brazil, India and South Africa have registered fast increases in foreign trade and their manufacturing PMI readings climb, indicating optimistic economic performance. It should also be noted that China's cross-border capital flows are still susceptible to instabilities and uncertainties. First, major economies may be homogeneous in normalizing their monetary policies with resonance effect, which, coupled with the tax reform, infrastructure investment and trade protectionism in the US, may impact global financial markets and global capital flows. Second, the foundation for the stability of global financial markets is still weak. Although risk aversion is at a historical low across the world, yet the risk of adjustment after continued rallies of the stock markets in some developed countries, and political risks and geopolitical conflicts in some regions may lead to changes in risk aversion and heightened volatility of cross-border capital. Third, economic and financial risks still exist in China. The country is now still at a critical moment in addressing major economic and financial risks. The leverage ratio of enterprises remains high, and issues such as hidden debt of local governments, real estate market, shadow banking, and internet finance are to be addressed. As a result, market sentiment and confidence may be impacted during risk exposure and disposal. III. Pursue All-round Opening-up with More Balanced Administration As China's cross-border capital flows find an equilibrium, all the macro-prudential policies adopted earlier have regained their neutrality. Going forward, the two-way flows of China's cross-border capital will become a normal and remain generally balanced. Next, foreign exchange authorities will boost the balanced management of cross-border capital flows: first, regarding the purposes of management, foreign exchange authorities will look at the increases and decreases in foreign exchange reserves more reasonably, placing a stronger emphasis on dynamic equilibrium of the balance of payments while achieving a higher level of trade and investment liberalization and facilitation. Second, in terms of management philosophy, policy neutrality will be adhered to. In micro regulation of the foreign exchange market, the consistency in the policies and standards for two-way cross-border capital flows will be stressed: both capital inflows and outflows in compliance with laws and regulations will be supported. Third, in enforcement of foreign exchange laws, authenticity and compliance with laws and regulations will be stressed, and consistency, stability and predictability of enforcement standards across cycles will be emphasized, while illicit outflows and inflows, especially irregularities such as underground banks, fabricated transactions and market manipulation, will be cracked down on, so as to safeguard the normal order of the foreign exchange market. (I) Policies for a higher level of trade and investment liberalization and facilitation will be adopted. First, law-based administration will be adhered to so as to satisfy authentic demands for foreign exchange under the current and capital accounts in conformity with regulations. Second, efforts will be made to serve the building of a trade giant and support and cultivate new trade formats. The regulatory system, service system and policy framework will be improved to continue to support the healthy development of new trading formats and models such as cross-border ecommerce, market purchases and comprehensive foreign trade services, and to standardize the development of cross-border payments through third-party payment institutions. Third, the Belt and Road Initiative will be focused on, with equal importance attached to "bringing in" and "going global". The new framework of foreign exchange administration for foreign-owned enterprises under the model of pre-establishment national treatment plus negative list will be studied to build stable, equitable, transparent, predictable and law-oriented business environment and protect legitimate interests of foreign-owned enterprises. International production capacity cooperation will be promoted under the Belt and Road Initiative. Efforts will be made to standardize and guide ODI, with focus on supporting capable and eligible domestic enterprises to make outbound investments in an active and steady manner, under the principle of classified management. (II) The two-way liberalization of the financial market will be pressed ahead with. First, the securities market will be boosted for two-way liberalization. Further efforts will be made to promote the liberalization of domestic stock and bond markets, by improving bond connect, studying Shanghai-London Stock Connect and supporting Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. The foreign exchange administration system for qualified institutional investors (QFII, RQFII, QDII, RQDII) will be reformed and improved. It will be made easier for market participants to allocate assets in larger space. The domestic market for derivatives such as commodity futures will be further opened up. Second, the open and competitive foreign exchange market will be opened up and improved. Efforts will be made to deepen the foreign exchange market, expand transaction participants, diversify transaction instruments, and expand the scope of transactions to boost market liberalization and satisfy participants' demands for risk mitigation. Third, education on risks will be intensified for market participants. Enterprises will be guided to build the awareness of "financial neutrality" and use various instruments on the foreign exchange market for hedging, so as to ensure sound exchange rate risk management. (III) The macro-prudential management system for cross-border capital flows will be built. The monitoring, early warning and response mechanism for the macro-prudential management of cross-border capital flows will be built and improved. The macro-prudential assessment system for cross-border capital flows will be built for the banking sector. Policy toolkits will be diversified, including management instruments aimed to reduce sharp fluctuations in cross-border capital, such as provisions of risks; the macro-prudential management policies focusing on bank and short-term capital flows. Efforts will also be made to adjust the short-term fluctuations of the foreign exchange market in a counter-cyclical manner to safeguard the security of the financial system and the equilibrium of the balance of payments. (IV) The micro-regulatory framework for the foreign exchange market will be enhanced. First, the cross-cyclical stability and consistency of policies will be ensured. The order of the foreign exchange market will be maintained in accordance with laws and regulations, the cross-cyclical consistency between law applicability and enforcement standards will be ensured, and a tough stance on foreign exchange irregularities will be maintained. Second, the authenticity, legality and compliance reviews will be conducted. Foreign exchange authorities will perform their review obligations in anti-money laundering, anti-tax avoidance and anti-terrorist marketing to protect the legitimate interests of market participants and crack down on price manipulation, false advertisement and consumer misleading. Third, penetrating regulation of cross-border transactions will be enhanced under the tracing principle. Fourth, the national security inspection of foreign investments will be ensured. (V)The operation and management capabilities of foreign exchange reserves will be strengthened. First, the coordination with monetary policy, foreign exchange rate policy, and cross-border capital flow policy will be further intensified to guard against systematic risks and make full use of the roles of foreign exchange reserves in ensuring external payment, and safeguarding stable foreign exchange rate and national economic and financial security. Second, investment capability building will be stepped up, and monetary and asset structure will be optimized so as to ensure security and liquidity while maintaining and increasing value. Third, key national strategies like the Belt and Road Initiative will be applied in a diversified way to boost international production capacity and equipment manufacturing cooperation to go deeper. 2018 is the first year to implement the spirit of the 19th CPC National Congress, the 40th anniversary of the implementation of the reform and opening up policy and a year crucial to securing a decisive victory in building a moderately prosperous society in all respects and to the implementation of the 13th Five-year Plan. Guided by the Xi Jinping thought on socialism with Chinese characteristics for a new era, foreign exchange authorities will uphold the underlying principle of pursuing progress while ensuring stability to fulfill the three tasks of serving the real economy, controlling financial risks and deepening financial reforms. Following the philosophy of balanced management, foreign exchange authorities will be committed to making new ground in pursuing opening up on all fronts, serving the development of the real economy, guarding against risks arising from cross-border capital flows and safeguarding national economic and financial security, in a bid to make new contributions to securing a decisive victory in building a moderately prosperous society in all respects and striving for the great success of socialism with Chinese characteristics for a new era. (The original text is available at caixin.com) 2018-02-07/en/2018/0207/1415.html